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Democratic Republic of the Congo

The 10 Poorest Countries of the World: Hottez

Republic of the Congo is one of the very poor countries in the world. In fact, many people believe that this country might be the poorest country in the world. The blog Hottez has ranked the Congo as top number 1 in the most poorest country in the world.

The GDP per capita is $300 (2010 est.) and the GDP is $22.92 billion (2010 est.) which is the 119th in the world. Despite its large land (2,344,858 sq km) and large population (70,916,439) the GDP is quite small.

Population growth rate is 3.165% which is high. The data for unemployment rate is not available. It may be because that there are so many people in poverty and jobless. The life expectancy is only 54.73 years for the whole population.

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How can demand/supply side policies help variety of people?

How should the government implement demand/supply side policy to help corporate leaders, unemployed workers and retired people? The government should utilize the policy that both stabilizes the inflation rate and lowers the unemployment rate to help all of these people. There aren’t any absolute solutions to these problems all simultaneously, yet there are always ‘best’ solutions.

The government could nullify the labor union’s power and make the wages flexible. By lowering to wages to an apt level, there will be surplus of money that can be used to employ a number of people. Also, the money that’s left could be used to increase the pension of the retired people. People who were employed will be angry, however, it’ll give them a strong sense of job security by looking at numbers of people coming in.

In order to protect the working population from the inflation, the government should implement the monetary policy in order to cut down money supply. By cutting down money supply, it’ll significantly decrease the inflation rate  to stable state. Also, the government could increase the interest rate in order to curb inflation.

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How can Fiscal Policies be used for the workers like Joe Brezinski?

Joe Brezinski is one of those workers who are fired and are worried about losing their house. They’ve formed worker’s political action committee called Campaign for Job Security. How can fiscal policies can help the workers like Joe? There are several actions that the government can implement to solve this problem.

The unemployment rate is 12.5% and the inflation rate is 9%. Joe Brezinski is part of that unemployment rate and is suffering from high inflation rate. To satisfy the workers of Campain for Job Security, the government can implement strict fiscal policy by taxation.

The government can impose 30% increase in taxation for all businesses. However, they can cut the taxation to 0% for those firms that are willing to employ a large number of people. This way the government can get the unemployment rate down to 1~0%.

The government should also decrease the amount of government spending to reduce the debt and deficit. Also, they should pressure the foriegn firms to invest on factories and technology to boost up the domestic aggragate demand.

So adjusting taxation for businesses according to how many people they employ will be a great help to the unemployed workers like Joe!

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What Greece must do to Survive the Debt Crisis

A frustrated Greek expressing his angry through violent protest

CNN News: Click Here

In action to fight off the increasingly unbearable debt crisis, Greece chose to get financial support from both EU (mainly Germany) and IMF. This might help Greece out of the problem in a short-run, yet they still have to pay back the money they have borrowed from EU and IMF. Now all Greeks must tighten their belt in order to fight off the crisis. There is a list of what Greece must to do recover their economy.

  1. Salary Cuts
  2. Retirement
  3. Increase in Taxation
  4. Reform in Pension System

First of all, all Greeks (at least public workers) will increase a cut in their salaries. Salaries are one of the big factors that take up large percentage of the cost in business and government spending. Though this will arouse some violent protests from the people, there is no other way to fight off the debt crisis without a cut in wages.

With some cuts in wages, many business and governments will want to minimize the number of employees as possible to decrease the money spent. This will result in early retirement of many workers with ages over 60. This will also contribute to the high unemployment rate, however, significantly cut the unnecessary budgets.

Interestingly, the Greek government decided not to have an early retirement for its workers but to increase the retirement. The retirement age was shifted from 61 to 65. It may be that Greece government didn’t want more unemployment and more protests regarding it. I think that the Greece government is tightening the payment of wages so much that they don’t need to cut down its workforce.

Greek people will most definetly exprience the rise in taxation. Greek government said that it was going to raise all VAT’s by 10%. Increasing taxation is one of the key ways that Greece can endure the crisis.

Greeks will also exprience a cut in pension. Unplanned pension system was the main culprits for the cause of Greece’s debt crisis. The government borrowed money, unplanned, in order to fulfil its populistic policy of pension system. The system supported too many people and gave out excess amount of money. So many aged Greeks will exprience this frustrating cut in their pension.

In sum, these were the actions that Greece must implement in order to survive the debt crisis. I think that the government’s determination to get out of the deb crisis is firm, but I think that this determination is not supported by lots of Greeks. Greek people must bear in mind that if they don’t start tighenting their belts, the government’s effort in order to get out of the crisis.

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The World’s Best Economy

After listening to all of the presentations in the class, I have come to the conclusion that Finland might be one of the world’s best economies in the world. I personally thought Hyun, Daniel, and Max’s presentation was intriguing.

I expected that Finland would have high education, high standard of living, and etc because it was one of Scandinavian countries. However, I was surprised that other countries such as Netherland had low points in the ‘happiness index.’ I heard that many people in Netherlands were depressed, which I assume that it is from the country’s gloomy climate.

I didn’ think that comparing water availability was appropriate for comparing European countries because most countries in fact have 100% clean water availability for everyone. The index should be used only when comparing developing countries like in African countries.

In sum, I personally thought that Finland is the world’s best economy after the presentation for its high HDI.

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The Worldly Philosophers

1. How is scarcity and survival intertwined?

In the book, a man looks at survival a problem as a member of a society related with scarcity. The fact that he is still alive seems to prove that the man has solved the problem of survival, however, the scarcity, or existence of want and misery, seem to undermine  the solution to the problem. Scarcity of resources and people’s desire for more creates problem. Economics study the scarcity of resources in a society and studies the society’s survival or endurance relating scarcity to it.

2. What are advantages and disadvantages of the two ways societies have been organized in the past?

In the primitive society, the reality that opportunity cost of not working was death forced people to work and cooperate as a member of society. The advantage of this society is that it forces everyone to work. However, the disadvantage of it is a struggle between life and death.

In advanced society, only half of the population never does anything “productive,” such as working in factories or mines. The advantage of this society is that work is not a struggle for survival like in the primitive society. However, the disadvantage of the society is that if even a small portion of the “productive” work force performed poorly or refused to work, it would affect and dismantle the structure of the society.

3. Why was there no need for economists throughout most of history?

Throughout history, most of societies had traditional economy, which means that occupation is passed down to generations. With everybody having fixed work, there was no need for economics and economists for the society did not need them to comprehend their economy or social structure.

4. Why do you think the economic  revolution was so disturbing?

In a traditional society, everything was obvious; every men had their fixed occupation. However, the idea of market system had dubious and unclear aspects. So the revolution to settle market system in these societies would have been very disturbing as it dismantled the traditional social structure. Also, it might have added uncertainties to people’s roles or occupations.

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